Apple’s Cook Has Tête-à-Tête With Irish Taoiseach
Apple (NASDAQ:AAPL) CEO Tim Cook had a private meeting with Irish Taoiseach (prime minister) Enda Kenny on Friday after touring an Apple facility in Cork, Ireland, reports the Journal. The Apple facility at Hollyhill Industrial Estate assembles the MacBook Pro and employs over 4,000 workers.
According to The Independent, the Taoiseach was meeting with the Apple CEO to discuss the company’s operations in Ireland and the potential for expansion. Kenny noted that Cook was “exceptionally happy” with the company’s Ireland-based operation, reports the Journal. Apple employs 3,300 people in Ireland and is one of the country’s largest multinational employers after Intel (NASDAQ:INTC) and Hewlett-Packard (NYSE:HPQ), reports The Independent.
Although Cook visited a facility that makes computers, Apple’s Ireland-based operations are perhaps best known for being an essential part of the California-based company’s elaborate tax avoidance strategies. Last year, Cook made an appearance in front of the Senate Permanent Subcommittee on Investigations in order to answer questions about the company’s offshore tax practices. The Senate hearing revealed that Apple avoided income taxes on $74 billion in profit made between 2009 and 2012 by using multiple subsidiaries based in low-tax countries such as Ireland.
According to the Journal, Kenny discussed the tax issue during their meeting, although it was not clear who broached the subject. “I pointed out to Cook that Ireland, as a member of the [European] Union, is participating in the OECD [Organisation for Economic Co-operation and Development] discussions that are taking place now about an international response in terms of clarity about the tax position,” Kenny told the Journal. “There are fifteen different sectors involving that and Ireland is participating in them all.”
Kenny also refuted rumors that Apple had negotiated a special tax deal with Ireland. The Taoiseach noted that Ireland has a statutory 12.5 percent tax rate that applies to all businesses. Ireland’s tax rate is considerably lower than America’s corporate tax rate of 35 percent and has made the country an attractive base of operations for several U.S. tech companies.
Like several other multinationals, Apple has also registered companies in Ireland in order to take advantage of country’s unique territorial tax system through a tax strategy known as the “Double Irish.” The “Double Irish” strategy requires setting up two separate companies in Ireland. One company owns the intellectual property while remaining a resident of a tax haven such as Bermuda or the Cayman Islands. The other company licenses the intellectual property of the first company for a sizeable fee.
After this, a fee is deducted from the sales income of the second company, leaving a relatively small amount of income that is then taxed at Ireland’s low 12.5 percent rate. The “Double Irish” is legal under U.S. and Europeans laws and is also used by other U.S. companies such as Google (NASDAQ:GOOG) and Facebook (NASDAQ:FB). According to the UK’s Telegraph, Michael Noonan, Ireland’s Minister for Finance, recently announced that the country has no plans to make any major changes to its corporate tax laws.
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